What’s Facebook’s next strategic move after the metaverse?
In the fall of 2019, right after the last Oculus Connect conference (before re-branding it to “Facebook Connect”…), I posted “What’s Facebook’s next VR headset after Quest?” with some predictions about the direction of the VR hardware line-up from Facebook Reality Labs. In that article, I guessed that we would see an improved $300 follow-up headset to the first Quest within 2020 — which came true. We’ll see where the rest of the future projections I made will land, because they included details about possible releases into 2022…
Ok, after this preamble — let’s get into it. First, I admit the headline above is an oxymoron. There is no meaningful way to speak about a paradigm “after the metaverse”.
Why there’s no “after the metaverse”
Similar to how virtual reality has been called “the last medium” — because, as a 3D canvas with all sensory modalities represented and re-projected, VR has the potential to contain all imaginable forms of human expression — the metaverse can reasonably be called “the last internet”. Evolved from a networked bulletin board via the paradigm shift of web 2.0, enriched by vivid media and social interactions, the internet is now stepping into its next and ultimate evolutionary form.
The metaverse is spatial, decentralizING (but not necessarily “decentralized”), and ubiquitous. But it can’t and won’t be owned by a single company or creator. For a great primer on what the metaverse is, I defer to Tony Parisi’s excellent piece The Seven Rules of the Metaverse. In it, he expands on the rules, which are as follows:
- Rule #1: There is only one Metaverse.
- Rule #2: The Metaverse is for everyone.
- Rule #3: Nobody controls the Metaverse.
- Rule #4: The Metaverse is open.
- Rule #5: The Metaverse is hardware-independent.
- Rule #6: The Metaverse is a Network.
- Rule #7: The Metaverse is the Internet.
Before you do anything else, please go and read the whole article. (Alternately: listen to the interview Kent Bye did with Parisi on the topic in the Voices of VR podcast)
Facebook’s virtual worlds are not “their metaverse”
An important confusion to clear up is around Horizon — the virtual world, sandbox and recently expanded into family of apps (including, so far, Horizon Worlds, Horizon Workrooms and Venues ) for hanging out together, doing work meetings or attending events as avatars. A lot of people seem to think that this is what Facebook is referring to when they speak about “the metaverse”.
Sure, Facebook are building virtual worlds. They are also buying studios that are doing the same (BigBox are the developers of Population One, which has been called “the Fortnite of VR”. Fortnite, in turn, is described by Epic Games as an important part of the metaverse). Furthermore, they are managing an app store where multiple other virtual worlds are linked to (VR Chat, Alt Space, Spatial, etc).
So… is any of this — or even all of it as a whole — “Facebook’s metaverse”? NO. If you’re still confused, please go back to the Seven Rules quoted above.
Facebook and The Creator Economy: Content + community (+commerce) is king
Facebook is very aware of their challenges in the changing digital media landscape. Their brand is losing trust from the public, their ad business is in headwinds from Apple’s new device tracking policy, and they are pretty much in steady decline when it comes to younger users.
Their focus on becoming a metaverse company is one half of their change in direction. The other half? “The creator economy”. In addition to re-thinking their dependence on your personal data to target their ads as effectively as possible, they really want to explore digital and physical commerce as viable revenue sources.
Ads won’t go away as their dominant revenue driver for long, but the business model of “if you don’t pay for the product, you’re the product” will be complemented by the balancing force of commerce. (Please note: This is a LONG game. We will probably not see even close to a 50/50 distribution of ad/commerce revenue for Facebook within this decade!)
Facebook want to empower users in their network to make money. Be it from selling hobby craft or second-hand clothing, or from expressing creativity by creating content — video, paid newsletters, or… other digital goods.
Metaverse + Creator Economy = The “Super app” of VR/AR/reality
The next strategic direction from Facebook is the next logical evolution of the whole digital media landscape. It’s what’s already happening with WeChat and other “super apps” in Asia, but applied on both our physical and digital realities.
What is a super app? It’s when ONE app in your phone becomes the interface to pretty much every digital (or digitally connected) service you need to manage in your everyday life. Order food? Do your banking? Follow your idols, and interact with them by shopping stuff they recommend in real-time? Get a cab? Pay at the café, clothes store, or at the local flea market? Share photos, videos and messages with friends? Yes. That and much more. (Read an intro on super apps from CPP Investments).
But super apps are yet to become The Next Big Thing here in the west. One might wonder if the metaverse focus is meant as a “wedge” for Facebook to reach that kind of “quintessential status” for a small, enthusiastic user segment first, and expand from there…
Here’s a quote from Mark Zuckerberg:
Our goal is to help the metaverse reach a billion people and hundreds of billions of dollars of digital commerce this decade
What could “digital commerce” include if we expand it to “super app breadth” for the metaverse… and beyond?
First, remember that the metaverse implies interoperability of platforms and portability of objects. So, user-created, sellable digital goods could include:
- images (including collectibles/NFTs. Of course, “non-fungibility” could be interesting for the below categories too)
- videos
- exclusive stream access
- in-game creations… such as mini-games
- 3D effects/lenses
- 3D objects
- 3D avatars
Note again: the metaverse stipulates that users are able to create digital goods that could be used and transferred across multiple virtual worlds. The owners and makers of those worlds would also offer their goods, and be able to make those items/objects transferrable/portable to other worlds as well. The recent article How to get paid in the metaverse creator economy today by Alec Lazarescu gives a great intro to this topic!
… and to further expand the scope of “digital commerce” into “super app” territory, let’s also include the possibility of any digital service or subscription (from Spotify/Netflix to Amazon Prime to Uber ride credits, etc) to be sold and used/consumed in the metaverse context.
Let’s illustrate this with some fictive future possibilities:
- When you put on your VR glasses, you start in your Oculus Home lobby/gallery environment, where you can check news, your calendar and email on virtual monitors on the wall. Your Spotify morning playlist is pumping out from 8 virtual speakers in your space, but the drama show you have queued up from Netflix is on pause on the big screen in your cozy cinema corner.
- You have some notifications about incoming virtual objects. Sweet, there’s that custom hat+holographic tattoo set you ordered from your favorite indie 3D artist! Put that away from now.
- Later, you’ll want to spend some time with friends in your favorite social hangout. You jump into the “pocket wardrobe portal” and choose from your social avatars, while talking to your friends over group voice chat before you meet them.
- You order an Uber and head out on town. You remove the VR blinders and your glasses are now in AR mode. You watch one of your Netflix episodes on a big HUD screen while in the car.
- In the park, you log into the Pokemon Go Universe and catch a couple new Pokemons. Your glasses project the little critters in life-size in front of you, and highlights the other players who are tending to their Pokemon stuff a bit further away…
- … and so on.
The Metaverse Wallet: Your most important virtual possession
Now, how could this be tied together in an attractive, user-facing package?
Here’s where identity and your metaverse wallet come in. Your lifelike avatar, all your social/action/masquerade/etc avatars and their clothes and accessories, all your digital service subscriptions and memberships, your games and in-game objects, your digital currency and NFTs, tickets to virtual and real events, all of it are connected to your Metaverse Wallet which has a digitally verification to belong to the real You.
Lots of providers will offer Metaverse Wallets. Stripe, Paypal, Shopify, Apple, Amazon… and “The New Facebook”. The basic wallet is free and available to anyone, but buying a pair of XR glasses gives you a free trial period of the Premium wallet. You get a lifelike avatar, more perks, and some monthly “free” (pre-paid) credits you can use for anything in the system. After the 6-month free trial, you decided to keep Premium Basic for $5/month, but you aren’t sure yet about the Premium PLUS option. For $15/month you could get more pre-paid credits, but you also get more Creator Perks… AND you would get “VIP anonymity” that lets you opt out of any or all personal data tracking and ads.
And that’s the metaverse business model from “The brand formerly known as Facebook”. You fill the wallet through a subscription or by one-time deposits, and Facebook takes a cut every time you do a transaction with a provider. Just like the iOS app store, Steam, etc — but on a scale of a billion people in the metaverse, doing transactions both there, on the flat web and in physical reality, buying stuff from big companies as well as small and big “Creators”.
